Empowerdex

Broad-based Black Economic Empowerment (B-BBEE) ____________________

Courtesy of:Courtesy of:

Who is Empowerdex ?

• Empowerdex is a Black Economic Empowerment solutionsprovider

• The primary goal of Empowerdex is to facilitate blackeconomic empowerment to both public and private sectorsthrough :

• Provision of BEE Ratings and Scenario Simulations

• Provision of BEE Research• Provision of BEE Research

• Risk Analysis and Management Solutions

• BEE Transaction Impact AnalysisBEE Transaction Impact Analysis

• Development of BEE Policy and Strategy

Empowerdex ExperienceEmpowerdex ExperienceTop Empowerment Companies in conjunction with Financial Mail

Conducted BEE ratings since 2001 and completed 1,800 ratings (including

Prominent Empowerdex Rating Client:

• JSE Listed Companies and Subsidiaries:Adcorp, Alexander Forbes, AST, Bidvest, City Lodge, Consol, Comair, Datacentrix, Didata, Fochini, Investec, IST, Asset Managers. completed 1,800 ratings (including

interviews and site visits)

Offices in Johannesburg, Cape Town, Durban, East London and Pretoria

LA Group, McCarthys, Metropolitan, Nampak, Old Mutual Asset Manager, Pick ‘n Pay, Rainbow Chicken, Reunert, Premier Food

• Multinational Corporations:Dell, DHL, LGM, Philips, SAP

Sector Charter Development – Tourism, AgriBEE and now Services

Rated companies of all sizes

• Large Professional Services Firms:Bell Dewar, Bowman Gifillan, Deloitte & Touche, Ernst & Young, Gobodo, KPMG, Nkonki, PWC, Webber Wentzel, Werksmens

0

50

100

150

200

250

Eastern Cape1.4%

Limpopo0.7%

Northwest0.6%

Mpumalanga0.6% Free State

0.3%

Kwazulu Natal3%

GautengWestern CapeKwazulu NatalE t C IT O

ther Services

Autom

obile & Transport

HR & Personnel

Construction

Manufacturing

Financial Services

Professional S

ervices

Media &

Photography

Retailer

Household G

oods and Textile

Printing and S

tationery

Hotel &

Leisure

Health and P

harmaceutical

Food and Beverages

Other S

ectors

7.3%

Western Cape13.0%

GautengGauteng76.1%76.1%

Eastern CapeLimpopoNorthwestMpumalangaFree State

Background: BEE Strategy & Actg gy• Since 1994 BEE has been a major thrust of all government policies, but there was no coherent

strategy towards the implementation of BEE

• The BEE commission released a report in 2000 which gave the first attempt at broadly definingBEE

• The receipt of this report by government played a pivotal role in the development by governmentof strategy towards the implementation of BEE

• In 2003 a strategy for Broad-based Black Economic Empowerment (B-BBEE) was released,which defines B-BBEE

• The strategy laid the foundation for the B-BBEE Act (Act 53 of 2003). Section 9 of the Act statesthe issue of Codes of Good Practice

Elements of B-BEEE and Beneficiary BaseElements of B BEEE and Beneficiary Base

OwnershipOwnership

Equitable Economic OpportunitiesEmerging black middle class &

The Opportunity Barrier

AffirmativeAffirmativeProcurementProcurement

And ManagementAnd Management

EnterpriseEnterpriseDevelopmentDevelopment

investors

Black t

The Business BarrierSkills Skills

Development & Development & E lE l

ProcurementProcurement DevelopmentDevelopment entrepreneurs

Black workers, professionals,

The Skills Barrier

EmploymentEmploymentEquity / Job Equity / Job

CorporateCorporateSocial Social

Employment Employment EquityEquity

graduates, school-leavers

Black unemployed &

The Poverty Barrier

CreationCreation InvestmentInvestment unemployed & rural poor

Business Impact of BEEBusiness Impact of BEE

Government

Business Impact of BEEBusiness Impact of BEE

Retail

Government

Mining

Banks

Retail

TourismBanks

Insurers

Tourism

Telecoms

Business Impact of BEEBusiness Impact of BEE

Retail

SuppliersSupplier

Suppliers Suppliers

Suppliers

Suppliers

Government

Mining

Banks

Retail

Tourism

Suppliers

Suppliers

Suppliers

SuppliersBanks

Insurers

Tourism

Telecoms

Suppliers

Suppliers

Suppliers

Suppliers

Suppliers SuppliersSuppliers

Suppliers

Business Impact of BEEBusiness Impact of BEE

Suppliers

Suppliers Suppliers

Retail

SuppliersSupplier

Suppliers Suppliers

Suppliers

Suppliers

Suppliers

Suppliers

Government

Mining

Banks

Retail

Tourism

Suppliers

Suppliers

SuppliersSuppliers

SuppliersBanks

Insurers

Tourism

Telecoms

SuppliersSuppliers

SuppliersSuppliers

Suppliers

Suppliers

Suppliers

SuppliersSuppliers SuppliersSuppliers

Suppliers

Suppliers

Arrangement of the CodesArrangement of the CodesBEE ELEMENTSBEE ELEMENTS WEIGHTINGS WEIGHTINGS CODE REFERENCECODE REFERENCE

CONCEPTUAL FRAMEWORK OF B-BBEE

CODE 000• Scorecard out of 100

OWNERSHIP 20 POINTS CODE 100

MANAGEMENT & CONTROL 10 POINTS CODE 200

EMPLOYMENT EQUITY 15 POINTS CODE 300

• Score points by contributing towards the seven elements

EMPLOYMENT EQUITY 15 POINTS CODE 300

SKILLS DEVELOPMENT 15 POINTS CODE 400

PREFERENTIAL PROCUREMENT 20 POINTS CODE 500

• Represents overall contribution to BEE

ENTERPRISE DEVELOPMENT 15 POINTS CODE 600

RESIDUAL CONTRIBUTIONS 5 POINTS CODE 700

QUALIFYING SMALL ENTERPRISES 100 POINTS CODE 800

BEE In Different ThresholdsBEE In Different Thresholds

Generic Scorecard

ANNUAL TURNOVER

Generic Enterprises

All 7 Elements(Total weight of 100%)

Statement 000 - 700

Qualifying SmallEnterprises (QSE)

QSE Scorecard

Choose 4 out of 7 Elements(All Elements weigh 25%)

R35m

Exempted Micro Enterprises (EME)

Statement 800 - 807

Exemption

R5m

Exempted Micro Enterprises (EME)

Automatic Level 4 Recognition

R0

BEE Recognition LevelsBEE Recognition Levels

RECOGNITIONSCORELEVELSYMBOL

>100%Level 1 135%AAA+

RECOGNITIONSCORELEVELSYMBOL

>100%Level 1 135%AAA+

≤ 65% - 75%

≤ 75% - 85%

≤ 85% - 100%

Level 4

Level 3

Level 2

100%A

110%AA

125%AAA

≤ 65% - 75%

≤ 75% - 85%

≤ 85% - 100%

Level 4

Level 3

Level 2

100%A

110%AA

125%AAA

≤ 40% 45%

≤ 45% - 55%

≤ 55% - 65%

Level 7

Level 6

Level 5

50%B

60%BB

80%BBB

≤ 40% 45%

≤ 45% - 55%

≤ 55% - 65%

Level 7

Level 6

Level 5

50%B

60%BB

80%BBB

< 30%

≤ 30% - 40%

≤ 40% - 45%

Non-Compliant

Level 8

Level 7

0%D

10%C

50%B

< 30%

≤ 30% - 40%

≤ 40% - 45%

Non-Compliant

Level 8

Level 7

0%D

10%C

50%B

OwnershipOwnership

Management & ControlManagement & Control

Senior Top Management : • CEO

COO• COO• CFO

Other Top Management : • CIO• Head of SalesHead of Sales• Head of Marketing• Head of PR• Head of HR

Employment EquityEmployment Equity

Consolidation of JM & MM: Adjusted Recognition for Gender:• Targets of JM• SM: 8 Points• JM & MM: 6 Points

A = B/2 + C

A = Adjusted RecognitionB = Black PeopleC = Black WomenC = Black Women

Skills DevelopmentSkills Development

Includes Indirect Costs:• Cost of Training Material

C t f T i

ABET Training recognised at multiple of 1.25

• Cost of Trainers• Cost of Training Facilities (incl. Catering)• Scholarships / Bursaries• Course Fees• Accommodation & Travel• Administration Costs

Informal Training (see Cat. G): Max. 15%

Administration Costs

Preferential ProcurementPreferential Procurement

Specific procurement targets for small enterprises Enterprise Development Suppliers recognised at multiple of 1.2

Enterprise DevelopmentEnterprise Development

No Profit:

3% x Indicative Profit Margin x Turnover

Examples of Enterprise Development:• Grant Contributions• Investments• Loans

Minimum Requirements for Beneficiary Entity:• Cat. A: (Multiple of 1.25)

• EME/QSE – 50% Black Ownership• Cat. B:

• Generic – 50% Black Ownership

• Loans• Guarantees / Security provided• Credit Facilities• Direct Costs Incurred• Overhead Costsp

• Level 6 – 25% Black Ownership • Developmental Capital• Preferential Credit Terms• Discounts• Training / Mentoring

Socio-Economic DevelopmentSocio Economic Development

No Profit:

1% x Indicative Profit Margin x Turnover

Examples of Socio-Economic Development:• Grant Contributions• Guarantees / Security provided• Direct Costs Incurred

Minimum Requirements for Beneficiary Entity:• 100% Recognition:

• > 75% Value Directly Benefits Black People• Pro-rata Recognition:

• < 75% Value Directly Benefits Black People

• Overhead Costs• Developmental Capital• Preferential Credit Terms• Discounts• Training / Mentoringy p • Training / Mentoring

Why Transform?Why Transform?

Customer– Has any of your customers requested BEE information?– Are any of your customers likely to be required by their customers toAre any of your customers likely to be required by their customers to

transform?

CompetitorsA f tit t f d?– Are any of your competitors transformed?

– Can a BEE supplier potentially provide a substitute to your products or services?

Competitive Advantage– Can BEE potentially become a competitive advantage to your company?– Showing your commitment to the process, out of your own free will

Practical ApplicationPractical Application

EmpowerDEX Detailsp

Contact Person : Zandile ZondoE-Mail : zzondo@empowerdex.comCell : 082 090 6228Tel : 031 267 0707 Fax : 031 266 8354

Physical Address:1 Nelson RoadEssex Gardens, Buckhurst Building, Suite 5&6 Westville

Website Address : www.empowerdex.com

Empowerdex Pricing MatrixEmpowerdex Pricing Matrix

EMEAnnual

Revenue>R5m and >R15m and >R25m and >R35m and >R50m and >R100m and >R250m and

PRICING MATRIXQSE GENERIC

Annual Revenue Annual Revenue

<R5m>R5m and

<R15m>R15m and

<R25m>R25m and

<R35m>R35m and

<R50m>R50m and

<R100m>R100m and

<R250m>R250m and

<R500m >R500m6 Months R500 + VAT12 Months R950 + VAT12 Months 4,900 + VAT 6,800 + VAT 7,500 + VAT 7,500 + VAT 8,800 + VAT 8,800 + VAT 8,800 + VAT 9,850 + VAT 1 to 10 Employees12 Months 4,900 + VAT 6,800 + VAT 7,500 + VAT 7,500 + VAT 9,850 + VAT 9,850 + VAT 9,850 + VAT 13,750 + VAT 10 to 50 Employees

Validity Period

Number of Employees

, , , , , , , , p y12 Months 4,900 + VAT 6,800 + VAT 7,500 + VAT 8,800 + VAT 13,750 + VAT 13,750 + VAT 13,750 + VAT 15,250 + VAT 50 to 100 Employees12 Months 4,900 + VAT 6,800 + VAT 7,500 + VAT 9,850 + VAT 13,750 + VAT 15,250 + VAT 15,250 + VAT Quoted 100 to 250 Employees12 Months 4,900 + VAT 6,800 + VAT 7,500 + VAT 13,750 + VAT 15,250 + VAT 17,600 + VAT Quoted Quoted 250 to 500 Employees12 Months 4,900 + VAT 6,800 + VAT 7,500 + VAT 15,250 + VAT 17,600 + VAT Quoted Quoted Quoted > 500 Employees